What's in a College Financial Aid Package?

The myOptions Team

It’s probably not surprising that for many students, the financial aid package is a huge factor in determining which college they’ll be attending.

Every college will create their financial aid packages a bit differently, but the types of awards you will see are similar. Being equipped with the knowledge of what these awards mean is crucial to accurately evaluating who is truly providing you the best aid.

We’ll start out with a quick vocab lesson: three important terms you should be familiar with that are used to create your unique financial aid package are the cost of attendance (COA), expected family contribution (EFC), and need.

The cost of attendance typically includes your estimated tuition and fees (generally based on full-time enrollment), and an estimation of the following: room and board, transportation, books, and other miscellaneous costs. Definitely, pay close attention to what each college factors into their estimated COA because some may include more than others.

Your expected family contribution is the number your FAFSA application generates based on the info you input. This is the amount that the government believes you and your family can reasonably contribute towards your college education per academic year. You will have to renew your FAFSA each year so your EFC can change.

If there is a difference between the cost of attendance at a college and your EFC, that is known as need. Financial aid offices do their best to cover the amount of your need by providing various forms of financial aid.

Simply stated:

cost of attendance - expected family contribution= need

Grants and scholarships

Ideally, you want your financial aid to consist of mainly grants and scholarships because this is “free money” AKA you do not have to pay it back. Grants and scholarships can come from colleges, the government, the state, and from outside sources. It is important to let your college know about outside scholarships ASAP because they will impact your financial aid package. I do caution you that some grants, such as the TEACH grant, will be converted to student loans if you do not fulfill the associated service obligation post-graduation so read the fine print!

Direct Stafford Loans

Direct Stafford loans are offered to eligible students at colleges to help fund their education. These loans are backed by the federal government and will typically have lower interest rates and more flexible repayment options than most private loans. Students are capped on the amount they can take per year. For example, a first-time in college freshman classified as a dependent student will only be able to utilize $5,500 per academic year. The amount increases per year in college, up to $7,500 per academic year. There are two kinds of Direct Stafford Loans you may see: subsidized and unsubsidized.

Subsidized loans DO NOT accrue interest while you are in-school (aka you are enrolled at least half-time) or during the grace period of the loan, which is the 6 months after you leave school or drop below half-time status. A portion of the direct loans you are offered may be in the form of subsidized loans if you have a high financial need. You will also see unsubsidized loans; these loans will begin accruing interest as soon as they disburse (are applied to your bill or direct deposited to your bank account). All of the interest accrued while you are in school will capitalize (aka it will be added to your principal balance). If you are able, it’s super beneficial to start making interest-only payments while still in school so that amount does not continue to grow. For Direct Stafford loans, you will complete the master promissory note (loan contract) and entrance loan counseling (covers terms of loan, repayment etc.), these are really important so definitely pay close attention and take notes.


The acronym PLUS means “parent loan for undergraduate students.” You may see a PLUS loan estimate on your financial aid package. This means your parents have the opportunity to apply for the PLUS loan to cover your remaining cost of attendance if they choose. The PLUS loan is solely in the name of the parent and approval is based on a satisfactory credit check. If your parents are denied the PLUS loan, they may request an endorser, or you have the option to receive additional Direct Stafford unsubsidized loans. Repayment for PLUS loans typically begins upon disbursement unless your parent applies and is granted deferment.


The Federal work-study program provides part-time jobs for students with financial need. These jobs are typically on-campus. If you are interested in being considered for work-study opportunities, be sure to indicate this on your FAFSA application. Your work-study opportunity will have a certain amount of money you are eligible to earn through this program; therefore your hours will be capped once this amount is reached. The school will pay you directly either via direct deposit to your bank account or you can choose to have this payment applied to your student account for tuition and fees.

Understanding the different award types will provide you a solid foundation to evaluate your options. It is always beneficial to have the Financial Aid office explain your package to you and answer any questions that you have. Always remember, you can pick and choose what aid to accept, and even reduce amounts. For loans, it is wise to take only what you absolutely need and be sure to ask about payment deadlines and payment plan options. Being in the know of all things financial aid will definitely pay off!

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